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Throughout the 2012 election cycle Republicans have pined for a bold, conservative reformer—a leader courageous enough to make difficult choices and articulate enough to explain them to a skeptical public. The good news is they have such a candidate. The less good news: Scott Walker isn’t running for president. He’s running to hang on to his job as governor of Wisconsin.

Walker is the target of a recall effort funded by national labor unions. Why? Reforms he made to balance the budget have dramatically diminished the influence of public employee unions. If not reversed, these reforms will inspire similar efforts across the country, and the outsized power of public sector unions will finally be reined in.

The election in Wisconsin—which will happen in late spring or summer—could have a profound impact on the 2012 presidential race, with the winning side emerging from the battle organized and energized in one of the most important swing states this November.

Walker came to office in the Republican wave of 2010. He inherited a mess. Under his profligate predecessor, Jim Doyle, state government had operated almost as a slush fund for public employee unions. Giveaways to teachers and others put the state on an unsustainable fiscal path, so Doyle raised some taxes and threatened to raise others. He raided a state fund set up to cover medical liability, essentially stealing contributions doctors had made to the pooled account. The Wisconsin Supreme Court ruled against that pilfering, but the money had already been spent. Even after budget gimmickry that would make Fannie and Freddie blush, the official deficit was $3.6 billion.

More by Stephen F. Hayes

Just over a year later, Walker and the Republicans in the state legislature have nearly eliminated the deficit. For the two-year budget cycle, the state will show a $143 million shortfall because the stagnant economy has resulted in lower tax receipts than had been projected. But the shortfall is for the first half of the cycle; Wisconsin will run a surplus in the current fiscal year. And Walker said last week that he will eliminate the remaining shortfall without raising taxes. It’s a credible claim. He reduced the deficit without raising taxes. In fact, one of his first moves upon being sworn in was to cut taxes on businesses. His subsequent reforms have allowed property tax receipts to go down for the first time in years—by some $47 million.

The recall vote Walker faces comes because of these results. The key to his success was his restructuring of health and retirement benefits for many state employees, asking them to contribute 5.8 percent of their salary to their pensions (up from 1 percent or less) and to pay 12.6 percent of their health insurance premiums (up from 6 percent or so).

Even some of the governor’s harshest critics acknowledged that such changes were reasonable. “Walker is right about one thing,” wrote Eugene Robinson, liberal columnist for the Washington Post. “When it comes to pensions and benefits, public workers in Wisconsin have a sweet deal. . . . It’s easy to see why the average private-sector worker in Wisconsin—probably paying upward of 25 percent toward health insurance costs and struggling to tuck away something, anything for retirement—might agree with Walker.”

Walker understood from his years as Milwaukee County Executive that such changes could not occur without dramatic reforms of collective bargaining for public employee unions. So he proposed them, and Republicans in the state legislature made them law. The reforms also ended compulsory union membership.

The unions correctly understood these changes as a mortal threat. Without compulsory membership, unions would lose a major source of funds. And without the ability to bargain collectively for benefits, the unions would lose their most compelling argument to convince public employees to contribute a chunk of their income—in many cases more than $1,000 per year—for the privilege of membership. So they took to the streets in massive numbers and pressured the Democrats they’d elected to do everything possible to sabotage Walker’s plan. Democrats in the state senate fled to Illinois. Protesters occupied the state capitol. The fight captured national attention for months in 2011.

The unions lost that battle, but they did not give up the war. They launched an aggressive effort to recall several Republicans in the state senate with the hope of reversing the reforms before it became clear that they were working. They spent heavily—an estimated $30 million—and lost again.